BRINGING VITALITY TO MAIN STREET

Transcription

1 BRINGING VITALITY TO MAIN STREET How Immigrant Small Businesses Help Local Economies Grow

2 About Americas Society/Council of The Americas Americas Society and Council of the Americas (AS/COA) unite opinion leaders to exchange ideas and create solutions to the challenges of the Americas today. Americas Society (AS) is the premier forum dedicated to education, debate and dialogue in the Americas. 1 Council of the Americas (COA), affiliate organization to AS, is the premier international business organization with a membership that consists of leading international companies representing a broad spectrum of sectors including banking and finance, consulting services, consumer products, energy and mining, manufacturing, media, technology, and transportation. 2 The positions and opinions expressed in this publication do not represent those of Americas Society and Council of the Americas members or the boards of directors of either organization. This report was made possible with support from the Rockefeller Brothers Fund. The opinions and views of the authors do not necessarily state or reflect those of the Fund. For further information about AS/COA, visit AS/COA Online at About the Fiscal Policy Institute The Fiscal Policy Institute (www.fiscalpolicy.org) is an independent, nonpartisan, non-profit research and education organization committed to improving public policies and private practices to better the economic and social conditions of all New Yorkers. Founded in 1991, FPI works to create a strong economy in which prosperity is broadly shared. FPI s Immigration Research Initiative examines the role of immigrants in the New York State economy and beyond. The Immigration Research Initiative receives core funding from the Carnegie Corporation of New York, the Ford Foundation and the Open Society Foundations for its role in the State Priorities Partnership (coordinated by the Center on Budget and Policy Priorities). Opinions expressed here do not necessarily reflect the views of the foundations that support this work. No part of this publication may be reproduced in any form without permission in writing from Americas Society/Council of the Americas and the Fiscal Policy Institute. 1 Americas Society is a tax-exempt public charity described in 501(c)(3) and 509(a)(1) of the Internal Revenue Code of Council of the Americas is a tax-exempt business league under 501(c)(6) of the Internal Revenue Code of 1986, and as such, actively pursues lobbying activities to advance its purpose and the interests of its members.

3 Bringing Vitality to Main Street How Immigrant Small Businesses Help Local Economies Grow January 2015 David Dyssegaard Kallick, director of the Immigration Research Initiative at the Fiscal Policy Institute, prepared this report. He gratefully acknowledges the constant research support of James Parrott, FPI s chief economist, review from Ron Deutsch, FPI s interim executive director, and invaluable data analysis by FPI research associates Hui Liu and Eloy Fisher. The Immigration Research Initiative s research advisory panel provided valuable input and review, and the report is deeply indebted to interviewees in Philadelphia, Minneapolis St. Paul and Nashville, too numerous to name here. Both the advisory committee and interviewees are acknowledged at At Americas Society/Council of the Americas, Kate Brick, policy manager, leads the AS/COA Immigration and Integration Initiative, under which this report was produced. Steven McCutcheon Rubio, policy associate, helps oversee the organization s immigration work. Susan Segal, president and CEO, supports and guides the organization s immigration work. Richard André, former policy manager at AS/COA, played a fundamental role in the development of this report, which was also supported by the work of policy intern Zachary Bleckner. Paula Daneze designed this publication. ALL PHOTOS BY DAVID DYSSEGAARD KALLICK

4 TABLE of contents Executive Summary Introduction Part 1: Immigrants and Small Business Ownership: An Outsize Role on Main Street Part 2: Lessons from the Field: Philadelphia, Minneapolis St. Paul, and Nashville Conclusion & Best Practices: A Toolkit for Supporting Immigrant Business Growth Methodology 1

5 executive summary Over the past decade, several studies have shown that immigrants are more likely than their U.S.- born counterparts to be business owners. Less well known, however, is the outsize role immigrants are playing among Main Street businesses the shops and services that are the backbone of neighborhoods around the country. Immigrants role in Main Street businesses is striking. While accounting for 16 percent of the labor force nationally and 18 percent of business owners, immigrants make up 28 percent of Main Street business owners. And, immigrants play an even bigger role in certain Main Street businesses. Data from 2013, the most recent year available, show that in the U.S. as a whole immigrants make up 61 percent of all gas station owners, 58 percent of dry cleaners owners, 53 percent of grocery store owners, 45 percent of nail salon owners, 43 percent of liquor store owners, 38 percent of restaurant owners, and 32 percent of both jewelry and clothing store owners. And, immigrants make up a bigger proportion of Main Street business owners in metropolitan areas with large immigrant populations. Immigrants make up fully 64 percent of all Main Street business owners in the Los Angeles metro area, 61 percent in metro San Jose, 56 percent in metro Washington, D.C., and 54 percent in metro Miami. Main Street businesses make a direct contribution to the economy, but they also leverage that contribution by playing a critical role in making neighborhoods attractive places to live and work. A restaurant comes into a part of town that has had boarded-up storefronts and while mainly serving local customers at first starts to attract a clientele from around the city before long. A grocery store opens nearby, a few clothes stores, and maybe a barber or a beauty salon. More eyes on the street mean safer streets, and before long the neighborhood becomes a place more people want to come and live. What may have been an area in disrepair becomes more vibrant and more economically viable, with an increased tax base, more local spending, and more local jobs. The statistics here include all immigrants, including undocumented immigrants, refugees and high-skilled visa holders. There are important distinctions among these groups, but there are business owners among all of them, in varying proportions. The role of immigrants and immigrant Main Street business owners in neighborhood revitalization and local economic development should be of Immigrants make up 28 percent of main street business owners. particular interest to cities that saw significant population decline in the 1950s, 1960s and 1970s and are eager to bring about a rebound in population today cities such as Baltimore, St. Louis, Detroit, Pittsburgh, and Chicago. Over the past several decades, immigrants have given a critical population boost to cities with population decline. Among the 50 cities that had the largest populations in 1970, all of those cities with low levels of immigration have seen a total population decline from their mid-20th century peak. Offering a welcoming environment and a supportive infrastructure for immigrant communities is a smart strategy 2

6 for cities and states. And paying particular attention to immigrant Main Street business owners can be a very valuable part of that strategy, boosting neighborhood growth and often helping U.S.-born business owners along the way. Case studies from three metro areas that have experienced population rebound or growth yield some important lessons about realistic ways to help nurture immigrant Main Street business ownership and the economic revitalization it can spur. In Philadelphia, city government and nonprofit groups have focused on supporting the integration of immigrant businesses into the commercial corridors around the city, helping to boost their revival and to ease tensions with existing communities. In Minneapolis St. Paul, a range of nonprofit groups, together with support from a federal tax credit program, foundations and corporations developed a series of mall-sized markets that are both incubators for new businesses and neighborhood development projects in their own right. In Nashville, a broad coalition of business, labor, community, and political leaders came together to push back against a referendum that was seen to be anti-immigrant, in the process creating a lasting set of relationships that have helped set a positive tone around immigrant integration in the city. And, in all of the areas there were innovations in small business financing, culturally competent approaches to providing business services and classes, and a rethinking of how small businesses relate to city agencies. Immigrants are not magic ingredients to an economic development strategy, but they are an asset to the cities they join. When that asset is underutilized, it is a loss to the local economy. Finding ways to maximize the potential of immigrant Main Street business owners while creating a positive climate for U.S.-born business owners should be an important project for cities seeking to leverage the contribution of their immigrant populations. Some of the recommendations from our research are: Create a government office to address immigrant integration. Provide culturally competent business training and services. Make sure programs are open to all. Make financing innovative and community-based. Strengthen incubators especially commercial kitchens. Improve (and clarify) licensing and inspection processes for everyone. 3

7 Introduction Despite the growing body of research on the economic impact of immigrants, few studies have focused on the outsize role that immigrants have played in Main Street businesses the shops that give a neighborhood its character, such as restaurants, grocery stores, clothing boutiques, and beauty salons. Even less research has looked at how various programs and initiatives can support immigrant small business owners, or the impact of removing barriers to immigrant entrepreneurship on a city s economic development. This reports aims to address that gap. It seeks to uncover and quantify the valuable role immigrants play as business owners in cities around the country, and to highlight through in-depth looks into three metro areas that are gateways for immigrants how local government, civil society and the private sector can work together to support this population. Part One presents a quantitative analysis of the impressive role immigrants are playing among Main Street businesses in the U.S., looking at Main Street business ownership in the country s 50 largest metro areas. It looks at the particular challenge of central cities with declining populations and considers the role Main Street businesses play in revitalizing neighborhoods and rebuilding central city business districts. Part Two combines quantitative analysis with a qualitative study of immigrant Main Street businesses and efforts of local governments Few studies have focused on the outsize role that immigrants have played in main street businesses. and non-profits to support them in Philadelphia, Minneapolis St. Paul and Nashville. In Philadelphia and Minneapolis St. Paul, it examines the role immigrant businesses have played in reversing decades of population decline, and, in particular, how these businesses helped re-establish a commercial base for neighborhoods that were in disrepair, giving them new character and a critical economic boost. And, in Nashville, it shows how the vibrancy of immigrant neighborhoods have helped fill in and transform areas that were the less expensive parts of town, in some cases spurring the interest of a new generation of hipsters and foodies who now come to visit or to live in neighborhoods they might previously have overlooked. 4

8 Part I: Immigrants and Small Business Ownership: An Outsize Role on Main Street Of the the country s 4.9 million business owners, 900,000 are immigrants. 1 While representing 16 percent of the labor force overall, they represent 18 percent of business owners (Figure 1). 2 This differential of two percentage points means immigrants are about 10 to 15 percent more likely to be business owners than their U.S.-born counterparts. 3 More striking than the modest overrepresentation of immigrants among all business owners, however, is the outsize role that immigrants are playing among Main Street businesses. While immigrants make up 18 percent of business owners overall, they make up fully 28 percent of the owners of Main Street businesses. Main Street businesses are defined here as those which fall into three broad sectors: Retail (from jewelry stores to florists to grocery stores), Accommodation and Food Services (restaurants, bars and hotels), and Neighborhood Services (beauty salons, barber shots, nail salons, dry cleaning, and car washes). The first two are standard industry categories, while the third is the majority of what is generally called Other Services. Immigrants make up 61 percent of gas station owners, 58 percent of dry cleaners owners, 53 percent of grocery store owners, 45 percent of nail salon owners, 43 percent of liquor store owners, 38 percent of restaurant owners, and 32 percent of both jewelry and clothing store owners. 4 The owners of Main Street businesses make up a substantial share of the country s business owners overall. Of the 4.9 million business owners in the U.S., Main Street business owners make up 900,000. Not only are immigrants important to Main Street businesses, Main Street businesses are also important to immigrants. Because the total number of immigrant business owners in the country is coincidentally also 900,000, the country s 255,000 immigrant Main Street business owners make up 28 percent of all Main Street business, and they also make up 28 percent of all immigrant business owners (Figures 2 and 3). 5 Because Main Street businesses generally do not generate goods and services that are sold around the country or globally unlike the high-tech sector, for example they are infrequently the focus of economic development efforts. Yet, Main Street businesses present an important opportunity not only for residents who start out with little; they are also often a first business for immigrants and a source of first jobs for people in the community. And, they play an important role in generating neighborhood-level economic growth by making areas attractive places to live and work. Main Street businesses increase the tax base, and they spark further economic activity through increased consumer spending. These are often businesses with a thin profit margin. Main Street business owners represent 18 percent of all business owners but take home only 13 percent of business earnings. Nonetheless, the earnings of Main Street business owners are significant, totaling $50 billion $37 billion for U.S.- born business owners and $13 billion for immigrants (Figure 4). Figure Percent of Main Street Business Owners are Immigrants Fiscal Policy Institute (FPI) analysis of American Community Survey (ACS) year data. 13% Share of Population 16% Share of Labor Force 18% Share of Business Owners 28% Share of Main Street Business Owners 5

10 Part I: Immigrants and Small Business Ownership Main Street businesses are also more likely to be medium-sized employers. Analysis by the Fiscal Policy Institute (FPI) using the Survey of Business Owners (SBO) shows that while, overall, businesses are most likely to have 10 or fewer employees, Main Street businesses are a little more likely to have employees. This is driven in large part by the accommodation and food services businesses (Figure 5). 6 The overwhelming majority of U.S.- born Main Street business owners are white. Just four percent are black, five percent Hispanic and one percent Asian far less than their share of the labor force. Among immigrant Main Street business owners the very prominent place of Asians stands out: Asians make up 49 percent of all immigrant Main Street business owners, playing an especially big role in restaurants, dry cleaners and nail salons. Whites are 26 percent of immigrant Main Street business owners, Hispanics 20 percent and blacks 3 percent (Figure 6). Twelve percent of immigrant Main Street Business owners were born in Korea, 10 percent in India, 10 percent in Mexico, and 8 percent in Vietnam yet the top 10 countries combined make up only 59 percent of the total, with immigrants from around the world playing a role. Immigrants, Main Street Businesses and Economic Growth As immigration has grown, so has overall immigrant business ownership, with Main Street businesses playing an important part in that growth. This is a reassuring finding since it helps explain why studies have repeatedly found that immigrant workers are absorbed into the economy with only modest displacement of some categories of U.S.- born workers and no displacement overall: Immigrants are not just workers; they are also entrepreneurs. Their arrival expands the overall economy through new business development as well as through added investment and consumer spending. Looking at the growth in business ownership in the U.S. and in the country s 50 largest metropolitan areas, we see that immigrants are not only playing a very Figure 4. Main Street Businesses Brought $13 Billion in Earnings to Immigrant Business Owners FPI analysis of ACS year data. $335 All Business Owners $65 $37 U.S.-Born Foreign-Born $13 Main Street Business Owners big part in the growth of Main Street business ownership, but also in the growth of business ownership overall. Between 2000 and 2013, immigrants accounted for 48 percent of overall growth of business ownership in the U.S. During this time, the number of U.S.-born business owners grew by 400,000, while immigrant-owned businesses grew by 370,000. At the same time, immigrants accounted for all of the growth in Main Street businesses. The total number of U.S.-born Main Street business owners actually declined by 30,000, while immigrant Main Street business owners increased by 90,000, for a total net gain of 60,000. As in the country as a whole, immigrants accounted for all of the growth in Main Street businesses in 31 of the country s 50 largest metropolitan areas (Figure 7). Immigrants made up an impressive share of the increase in the remaining 19 metro areas as well, from 28 percent in Sacramento, 33 percent in Austin and 36 percent in Denver to over 90 percent in Philadelphia, Miami, San Diego, and San Francisco 96, 95, 92, and 91 percent, respectively. The number of immigrant Main Street business owners increased even in the seven metro areas that saw an overall decline in the number of Main Street business owners: Detroit, Birmingham, Columbus, Cleveland, Milwaukee, Pittsburgh, and Providence, 7

12 Part I: Immigrants and Small Business Ownership Figure 7. The 31 Metro Areas in Which Immigrants Make Up All Growth in Main Street Business Ownership Growth in Business Ownership in Metro Areas from 2000 to 2013 FPI analysis of Census 2000 and ACS year data. change in number of U.S. born business owners change in number of foreignborn business owners 6,000 4,000 2, ,000 4,000 New York Chicago Dallas/Fort Worth Houston Washington Boston Phoenix Detroit Tampa Baltimore Pittsburgh Portland San Antonio Cincinnati Cleveland San Jose Columbus Indianapolis Virginia Beach Nashville Providence Milwaukee Jacksonville Memphis Lousville/Jefferson County Oklahoma City Richmond Hartford New Orleans Birmingham Buffalo 6,000 though often by small numbers. There were 500 more immigrant Main Street business owners in Providence in 2013 than in 2000, 400 in Detroit and Columbus, and numbers too small to be measured with reliability in the other areas. Figure 8 shows a different dimension: the change in immigrant share of business owners in each metro area over the same period. There we can see not just the growth, but the overall importance of immigrants as Main Street business owners. Impressively, immigrants make up 64 percent of Main Street business owners in metro Los Angeles today (up from 57 percent in 2000), 61 percent in metro San Jose (up from 45 percent), 56 percent in metro Washington, D.C. (up from 43 percent), and 54 percent in metro Miami (up from 46 percent). Immigrants who own a business generally do better than other immigrants, just as U.S.-born business owners do better than other U.S.-born workers. Main Street businesses are less capital intensive, small-scale, and more locally oriented, giving them in general lower profit margins. Owners of Main Street businesses generally earn about the same as the overall median for the labor force in some metro areas a little more and in some a little less. Nationally, the median earnings for immigrants overall are $35,000, with immigrant business owners making considerably more ($49,000) and immigrant Main Street business owners making just a little more ($37,000). U.S.-born earners tend to make more in all categories, but the pattern is roughly the same, with the median earnings for U.S.-born Main Street business owners slightly below the median for all workers at the national level (Figure 9). The big numbers of immigrant Main Street business owners are all the more impressive when we consider that would-be immigrant entrepreneurs face a host of challenges, 9

13 Figure 8. Immigrants Make Up a Big and Growing Share of Main Street Businesses 50 Largest Metropolitan Statistical Areas Across Metro Areas, Immigrant Share of Main Street Business Owners Grew Between 2000 and % 60% 50% 40% 30% 20% 10% 0% New York Los Angeles Chicago Dallas-Fort Worth Houston Philadelphia Washington, DC Miami Atlanta Boston San Francisco Riverside Phoenix Detroit Seattle Minneapolis-St. Paul San Diego Tampa St. Louis Baltimore Denver Pittsburgh Portland, OR San Antonio Orlando Figure 9. Main Street Business Owners Earn Less than Other Business Owners FPI analysis of Census, ACS year data. Median earnings are for people who worked full-time and year-round. Importance of Small Business Owners Earnings of Business Owners as a Share of the Earnings of All in the Civilian Labor Force Earnings of Main Street Business Owners as a Share of Earnings of All Business Owners 6% 15% Foriegn Born Median Earnings in the Civilian Labor Force $35,000 Median Earnings of Business Owners $49,000 Median Earnings of Main Street Business Owners $37,000 U.S. Born Median Earnings in the Civilian Labor Force $45,000 Median Earnings of Business Owners $60,000 Median Earnings of Main Street Business Owners $44,000 from linguistic and cultural barriers to institutional ones. To cite one example, immigrant small businesses often encounter difficulties associated with not having a credit history and with a lack of familiarity with the American banking system. 7 When immigrants try to get start-up capital to open a business, for both Main Street businesses and in general, they are more likely than their U.S.-born counterparts to rely on savings and less likely to get a bank loan (Figure 10). 10

14 Part I: Immigrants and Small Business Ownership IMMIGRANT SHARE IN 2000 IMMIGRANT SHARE IN 2013 Sacramento Cincinnati Kansas City Cleveland Las Vegas San Jose Columbus Austin Charlotte Indianapoli Virginia Beach Nashville-Davidson Providence Milwaukee Jacksonville Memphis Louisville Oklahoma City Richmond Hartford New Orleans Raleigh Salt Lake City Birmingham Buffalo The lower level of reliance on or access to bank loans is all the more pronounced in the sectors with the largest share of Main Street businesses Retail, Accommodation and Food Services (which includes restaurants and hotels). For startup capital in retail businesses, the share of businesses to receive bank loans was 18 percent for immigrants and 28 percent for U.S.-born owners. In accommodation and food services, it was 21 percent for immigrants and 34 percent for U.S.-born owners. Urban Population Rebound: Immigration Is a Characteristic of Growth Metropolitan areas cities plus their surrounding suburban counties have with rare exception been increasing in population over the course of the past half century, albeit at very different rates of growth. The central cities that lie at the core of these regions, however, have seen a very different pattern. In many cases, cities saw a dramatic decline in population in the 1950s as suburbanization took off. These declines often accelerated in the 1960s and 1970s with white flight from inner cities. A number of the cities whose political leaders have made a particular effort to make their hometowns attractive to immigrants are among those that saw significant population decline in those years Baltimore, St. Louis, Detroit, Pittsburgh, and Chicago, for example. Immigrants have been a significant factor affecting the demographic fortunes of cities that saw their mid-20th century population loss slow, stop and reverse course. By the same token, of the 50 cities with the largest populations in 1970, all cities with low immigration have seen a total population decline from their mid-20th century peak. None of the cities with a decline in immigrant population saw their overall population grow or rebound between 1970 and In fact, no cities with low net growth of 10,000 immigrants or less saw a population increase or rebound. 8 New York may be the most striking example of population rebound. New York City had a relatively stable population of about eight million in the early post-wwii period. That changed in the 1970s when the 11

15 population declined precipitously by one million residents. Photographs from that period look similar to photos of abandoned properties in Detroit today. What is rarely recognized is that, although New York s population rebounded dramatically and has today reached a new peak of over 8 million, the U.S.-born population is about the same as it was at the city s decennial census lowpoint of 1980: 5.3 million (Figure 11). The entire arithmetic difference between then and now is the increase of the immigrant population from 1.7 to 3.1 million. Immigrants now account for 37 percent of the city s population. They along with people who stuck it out in depopulated neighborhoods and a mixture of other newcomers helped revive neighborhood after neighborhood, playing an important role in making New York the global city it is today. 9 New York is not the only example of a city where an overall population decline was checked and eventually reversed by immigration gain. Seventeen of the 50 cities with the largest population in 1950 followed this pattern of decline and then rebound, with immigrants playing an important role and not infrequently making up the difference between growth and decline. Among them are San Francisco, Washington, D.C., Boston, Seattle, Kansas City, and Atlanta as well as Philadelphia, Minneapolis St. Paul cities that will receive detailed attention in Part Two of this report. For a city, a bigger population is not always better, but a steeply declining population is almost always worse. Cities that are several hundred thousand people smaller than they were at their population peaks wrestle with a fundamental structural problem. They have to maintain infrastructure such as school buildings, roads and water supply on a tax base that is much smaller than the one it was originally designed to serve. The result is a seeming paradox: high tax rates and low tax revenues. Population growth certainly has its own attendant challenges from managing gentrification and controlling suburban sprawl to ensuring a strong floor in the labor market. But, as leaders in any city with a declining population will acknowledge, these are challenges you want to have. Main Street businesses are only one modest aspect of population rebound, but they are an often underappreciated part of the story. Indeed, an influx of immigrants and, by extension, immigrant-owned Main Street businesses often plays an important role in the revitalization of neighborhoods and cities. Immigrants often get a foothold in this country by opening small businesses in run-down areas, which also have immigrant residents. A Dominican, Kurdish, or African immigrant may have a better sense of what their compatriots in the area would like to buy in a grocery or clothing store, or what would entice them to a restaurant. Often these stores and restaurants begin to attract others from the community to that neighborhood, and they [immigrants] helped revive neighborhood after neighborhood [...] making new york the global city it is today. eventually break out and begin attracting the general population. Gradually, the neighborhood becomes more interesting, and with more eyes on the street it starts to feel safer. Before long, a vibrant neighborhood takes root, and the challenges may be more about rising rents than dangerous streets. 10 The lesson of these past 50 years is that cities that expect to grow should also expect a growing immigrant population and would do well to help make sure that immigrants who come to an area will thrive. There are many ways that cities can welcome immigrants, but supporting immigrant entrepreneurship is one good place to start. 12

16 Part I: Immigrants and Small Business Ownership Figure 10. Immigrants Are Less Likely to Get Bank Loans and More Likely to Rely on Savings FPI analysis of SBO Main Street Businesses 7% 8% 19% 28% 12% 68% 62% 11% family loan bank loan credit card savings Immigrant-Owned U.S. Born-Owned All Privately Owned Businesses 5% 5% 16% 12% 21% 69% 11% 65% Immigrant-Owned U.S. Born-Owned Figure 11. New York City Population Drop and Rebound, 1950 to 2013 FPI analysis of Census and ACS data. 9 8 Millions % 20% 18% 24% 28% 26% 37% Foreign Born U.S. Born Source: FPI analysis of Census historical data, ACS and the State of the Cities data system of the U.S. Department of Housing and Urban Development. 13

17 Part 2: Lessons from the Field: Philadelphia, Minneapolis St. Paul and Nashville To get a clearer picture of the role immigrants are playing at the local level as well as the ways that role can be supported and boosted to enhance growth further, we looked at three places: Philadelphia, Minneapolis St. Paul, and Nashville one in the Northeast, one in the Midwest and one in the South. These three areas are all in the middle range of the country s experience with immigration. Nationally, the immigrant share of the population is 13 percent. Only the city of St. Paul, with an immigrant share of 19 percent, has a substantially higher share than that in Philadelphia it is 13 percent, in Minneapolis 16 percent and in Nashville 12 percent. All three metropolitan areas have seen fast growth in immigration over the past two decades. In 1990, all were well below the national average in immigrant share of population. In the Brooking Institution s categorization of immigrant gateways, Philadelphia and Minneapolis St. Paul are re-emerging gateways, places with a history of substantial immigration in the early 20th century that have only recently regained that role. Nashville is a preemerging gateway, an area with little immigration in the past century, but with an immigrant population that grew very quickly in recent years. 11 In Minneapolis St. Paul and Nashville, refugee resettlement played a significant role in seeding the immigrant communities that grew around them. Secondary migration also played a role immigrants who first settled in other parts of the U.S. but then moved, often to join others from their country or ethnic group who had gained a footing in the local economy. Refugees have also been a part of the story in Philadelphia. The populations of all four cities would be falling if immigration were removed from the equation. This is not necessarily to say that if immigrants hadn t come no one else would have, but it is clear that for a time immigrants in these cities offset a decline in the U.S.-born population. In all three places immigrants have also played a big part in business growth. Between 2000 and 2013, immigrants represented 18 percent of overall growth in the number of small business owners in Philadelphia, 16 percent in Minneapolis St. Paul and 32 percent in Nashville. In all three metro areas immigrants represented an even bigger share of growth in Main Street business owners: 96 percent in Philadelphia, 68 percent in Minneapolis St. Paul and all of the growth in Nashville. Some commonalities emerge. In each area there is a level of government support and messaging that signals that immigrants are welcome. In Philadelphia and Nashville in particular, the current mayors have been strong advocates for immigrants, and both established mayor s offices to address immigrant and multicultural issues. There is also a strong network of nonprofit groups supporting immigrant small business development. These three places Philadelphia, Minneapolis St. Paul and Nashville were chosen because the support systems in place for immigrant business owners provide good case studies of how to foster growth. That is not to say that the infrastructure is fully developed or that settlement is easy for immigrants. But, what follows are examples of how, when supported properly, immigrant small businesses and particularly Main Street businesses can play a significant role in neighborhood-level development. The ways that these cities support their immigrant population offer important best practices that can be replicated in cities that are considering how to leverage the contributions of their immigrant population. 14

18 Street scene in Philadelphia's 9th Street Italian Market. 15

19 Philadelphia Economic Integration Strategy: Revitalizing the Commercial Corridors When the newly elected Mayor of Philadelphia, Michael Nutter, promised in his 2008 inaugural address to increase the population of the city, more than a few observers raised their eyebrows. Philadelphia s population reached a peak in 1950 and had fallen ever since most dramatically in the 1970s, but with significant declines continuing through the 2000 Census. Hoping for a rebound seemed optimistic, to say the least. But, a little-noticed change had begun to take place in the 1990s that made the mayor s prediction realistic: for the first time since the early 20th century, Philadelphia was seeing an increase in immigration. By 2000, there were 32,000 more immigrants living in the city than a decade earlier. This influx was not enough to stop the overall decline in population on its own, but it did temper the loss. In the 2000s, the decline in U.S.- born population slowed and the increase in immigration picked up. By 2013, the city s total population had grown by a modest 36,000 over its 2000 level, with an increase of 60,000 immigrants offsetting a decline of 24,000 U.S.-born residents. This increase in total population, though small, was a new phenomenon for the city (Figure 12). Immigrants and Main Street Business As the growing immigrant population began to occupy residential neighborhoods, immigrant small businesses started to fill the city s commercial corridors. In 1990, immigrants made up five percent of the population, five percent of the labor force and eight percent of small business owners in the Philadelphia metro area. By 2013, FPI s data analysis of ACS data shows that immigrants made up 10 percent of the population, 12 percent of the labor force and 14 percent of business owners (Figure 13). And, in Philadelphia, as at the national level, immigrant business owners are highly concentrated in Main Street businesses. Immigrants make up 28 percent of the area s Main Street business owners, including 23 percent of retail store owners and 34 percent of restaurant owners. In Philadelphia, where a number of immigrants are in comparatively wellpaying jobs, the median earnings for immigrants overall are $42,000 higher than the corresponding national median for immigrants of $35,000 cited above. On the other hand, median earnings for immigrant Main Street business owners are about the same in Philadelphia ($36,000) as around the country ($37,000). Here as elsewhere, Main Street businesses are small businesses with narrow profit margins, so it is not surprising that the earnings of Main Street business owners are not very high. At the same time, they are a good starting point for entrepreneurs, and a real help to neighborhood development. The annual earnings of Main Street business owners in metro Philadelphia are $1 billion, of which immigrant Main Street business owners earn $295 million. This money, like the wages paid to employees, expands the local consumer base. And, particularly where storefronts had previously gone unused, these small businesses help build the local tax base (Figure 14). Our analysis does not allow us to get a statistically significant breakdown of the country of birth of Main Street business owners in metro Philadelphia. But, we can see that of the 13,000 immigrant business owners overall in metro Philadelphia, 1,800 were born in India the largest single country of birth for immigrant business owners. Metro Philadelphia s next biggest group of immigrant business owners come from Korea, followed by Greece, China, Vietnam, Ukraine, Italy, Pakistan, Mexico, and Iran. Revitalizing Philadelphia s Commercial Corridors Immigrants strong representation as independent business owners and their equally strong contribution to neighborhood-level economic growth is perhaps nowhere more visible than in the 9th Street Italian Market. Jennifer Rodriguez, Executive Director of the Mayor s Office of Immigrant and Multicultural Affairs (MOIMA), explains that immigration has played a major role in revitalizing the market. Ten years ago, the Italian Market was in decline, she recalls. In the 1980s and 1990s, Italian and Irish shopkeepers 16

20 Part 2: Lessons from the Field Figure 12. Philadelphia Population 1900 to 2013: Growth, Decline and Rebound FPI analysis of Census data from decennial Census and ACS. In 2013, immigrants made up 13 percent of the population of the city of Philadelphia, the same share as in the United States overall. 2,500,000 Foreign Born U.S. Born 2,000,000 1,500,000 1,000, , Figure 13. Immigrants Make Up 28 Percent of Main Street Business Owners Philadelphia Metropolitan Area FPI analysis of ACS year data. 10% Share of Population 12% Share of Labor Force 14% Share of Business Owners 28% Share of Main Street Business Owners were retiring, and the stores started to close. Since that time, Rodriguez notes, Mexicans, then Vietnamese, Cambodian, Indonesian, [and] lately Bhutanese immigrants have been starting businesses, and you see a new mix of barber shops, tortilla shops, bakeries, restaurants that have sprung up and filled in the area. The 9th Street Italian Market is one of 265 commercial corridors identified by the City Planning Commission. Reviving and expanding these corridors is an integral part of the city s economic development plans. While the revitalization of the 9th Street Italian Market took place somewhat organically with the increase of the immigrant population, in recognizing the success of this model, a more concerted effort to spur similar development is underway on the 5th Street corridor, which has become known as El Centro de Oro. In the 1950s and 1960s, 5th Street was bustling with businesses owned mostly by German immigrants and their descendants, as well as some Italian, Polish and Irish, according to Gilberto Alfaro, Jr., the city appointed Business District Manager for the Centro de Oro corridor today. In the wake of the area s decline in the 1970s and 1980s, it has been repopulated by mostly Latino immigrants at first mostly by Puerto Ricans, and later by Dominicans. Today it is home to a varied mix that includes Mexicans, Guatemalans, Hondurans, Chileans, 17

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